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4i's Course Schedule-MG1, rj Microsoft Office Home x er 7 . Twitter-ac × / D Homework Chapter 7 × I erto.mheducation.com/tvn.tpx ork Chapter 7 Question 10 (of 20) 0.50 points Four grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Sberia. The cost of the musk oil is $2.10 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3 Year 3 First 108,000 Year 2 ourth Budgeted production, in botties 98,000 128 000 188 000 138 000 Musk oil has become so popular as a perlume ingredient that a has become necessary to carry larga nventorios as a precaution against stock-outs. For this reason, the inventory of musk oil at the end of a quarter must be equal to 20% of the following quarters production needs. Some 78 400 grams of musk oil will be on hand to start the first quarter of Year 2 Required: Prepare a dred materials budget for musk ol by quarter and n tota·for Year 2 Round "Unit cost af raw materials" answers to 2 decimal places.) Mit Direct Materials Budget Year 2 Quarter First Third Fourth Year Required production in units of finished goods Units of raw materials needed per unil of finished goods 98,000 128,000 188,000 138 000 of raw materials needed to meet production 392 000 102.400 494 400 512,000 150,40 662.400 752,000 110,400 862 400 552,000 4 416 000 dd Desired unts of ending raw materials inwetory Total units of raw materials needed Units of raw materials to be purchased Unit cost of raw materials Cost of raw materials to be purchased 94 400 662 400 862 400 Hints References eBook & Resources O Type here to search ALIENM

Explanation / Answer

S.No

Particulars

Quarter

First

Second

Third

Fourth

Year

(a)

Required production in units of finished goods

98000

128000

188000

138000

552000

(b)

Units of raw materials needed per unit of finished goods

4

4

4

4

4

(c)

Units of raw materials needed to meet Production [(a)*(b)]

392000

512000

752000

552000

2208000

(d)

Add: Desired units of ending raw materials inventory

102400
[512000*20%]

150400
[752000*20%]

110400
[552000*20%]

86400
[108000*4*20%]

86400

(e)

Total Units of Raw materials needed [(c)+ (d)]

494400

662400

862400

638400

2294400

(f)

Less: Beginning units of raw materials

78400

102400

150400

110400

78400

(g)

Units of Raw Materials to be purchased [(e) - (f)]

416000

560000

712000

528000

2216000

(h)

Unit cost of raw materials

2.1

2.1

2.1

2.1

2.1

(i)

Cost of raw materials to be purchased [(g) * (h)]

873600

1176000

1495200

1108800

4653600

S.No

Particulars

Quarter

First

Second

Third

Fourth

Year

(a)

Required production in units of finished goods

98000

128000

188000

138000

552000

(b)

Units of raw materials needed per unit of finished goods

4

4

4

4

4

(c)

Units of raw materials needed to meet Production [(a)*(b)]

392000

512000

752000

552000

2208000

(d)

Add: Desired units of ending raw materials inventory

102400
[512000*20%]

150400
[752000*20%]

110400
[552000*20%]

86400
[108000*4*20%]

86400

(e)

Total Units of Raw materials needed [(c)+ (d)]

494400

662400

862400

638400

2294400

(f)

Less: Beginning units of raw materials

78400

102400

150400

110400

78400

(g)

Units of Raw Materials to be purchased [(e) - (f)]

416000

560000

712000

528000

2216000

(h)

Unit cost of raw materials

2.1

2.1

2.1

2.1

2.1

(i)

Cost of raw materials to be purchased [(g) * (h)]

873600

1176000

1495200

1108800

4653600

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